U.S. corporate bond market issuance is projected to slow subsequent week from a busy begin to the yr after financial knowledge despatched combined alerts on Friday however tempered expectations of an rate of interest lower in March. The first week of 2024 noticed almost $59 billion in high-grade bond issuance, beating forecasts of $50 billion to $55 billion.
The rush was led by top-rated firms aiming to reap the benefits of comparatively decrease borrowing prices due to a tightening of credit score spreads, the premium charged over Treasuries, and decline in Treasury yields on the finish of 2023.
They have been met with robust demand as buyers aimed to lock in yields that is probably not out there if the Federal Reserve begins to lower U.S. rates of interest later this yr.
Mixed alerts
But financial knowledge releases on Friday despatched combined alerts and led to sharp strikes in Treasury yields. Yields hit three-week highs early in the buying and selling session after which nosedived, taking the 10-year Treasury again beneath 4%. The volatility in yields and launch of financial institution earnings subsequent week may restrict provide for brand spanking new bonds.
“Next week is going to be pretty light, pretty moderate in comparison,” stated Guy Lebas, chief fastened revenue strategist at asset supervisor Janney Capital Management. Bond-syndicate desks count on $35 billion on common in issuance subsequent week, in accordance to Informa Global Markets. As such, these desks count on a gentle circulation of recent bond issuance in January as borrowing prices have been nonetheless decrease than the fourth quarter of 2023.
